Australia Passes a Carbon Tax

Australia made a step in the right direction today in its efforts to tackle climate change, passing a carbon tax through its lower house of parliament. The government of Julia Gillard has staked a fair amount of political capital on this issue, which has polled poorly among the electorate. Loaded with benefits for pensioners as well as the affected industries, the tax is meant to ease the country into a cap-and-trade system several years down the road.

The vexing nature of policy innovations is that you have to at least try them to see which predicted effects come true. As Professor Clive Hamilton puts it, opposition to the carbon tax will likely "run out of steam" when the hyperbole of economic ruin fails to materialize.

The vexing nature of policy innovations is that you have to try them to be proven right or wrong.

Nonetheless, Australia is in a bit of a pickle when it comes to energy: 80 percent of its electricity comes from coal. In addition to being dirty, toxic, and deadly, coal is also terrible for the economy. New research shows that coal's economic value as a power source is outstripped by the economic damage it inflicts through poor health and other indicators. These new findings should assure Australians that financing the switch from coal to cleaner energy is in their overall economic interest.

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